9-Cent IRS Dilemma Leaves Lawyer Confused

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Published on Sunday, 04 January 2009

Written by Joe Swickard, Free Press

He owes a nickel and is due a 4-cent refund?

"It's not the money; it's the principle" is an old saying that usually brings a knowing, world-weary scoff from veteran Detroit criminal defense lawyer James Howarth.

"But I think this time with the IRS, it is the principle," Howarth said.

After all -- this is about 9 cents.

While many may fight the Internal Revenue Service over thousands of dollars, Howarth said he's in a dilemma with the federal agency, and he insists it's no chump change controversy.

"We are talking the IRS here," he said.

In mid-November, Howarth received notice that his FICA account, even after an adjustment, was out of whack.

He owed the IRS a nickel. And the IRS was serious.

It advised him to act promptly "to avoid additional penalty and/or interest."

Howarth started calculating how much that nickel was going to cost him.

As he figures it, there is the 5 cents plus the cost of a check -- payment must be made by check or money order. Then there is his CPA's fee, an envelope, his secretary's time, his own time and a 42-cent stamp.

"The costs are several hundred percent over the nickel," he said.

But then a second letter arrived. This one said Howarth had a refund coming.

The amount? Four cents. But to get it, Howarth would have to ask for it because it was less than $1.

"When I owe them a nickel, I must pay them," he said. "It's not optional. But when they owe me, I have to ask for it."

Howarth said it is unclear from the letters what connection -- if any -- the 5-cent obligation has to the 4-cent refund.

He said he is unsure if he now owes one penny or if there was a recalculation resulting in a 9-cent swing in his favor.

"I just don't know," he said. "But I do know that if I were to walk into the IRS office with pennies taped to a piece of cardboard, they wouldn't accept it."

Howarth said he called the 800 telephone number on his letters, but gave up after "an inordinate amount of time on hold. And I'm sure the agent would have been delighted to have this file land on his desk."

IRS spokesman Luis D. Garcia said the agency does not comment on individual accounts.

As for Howarth, he said he's consulting his accountant -- and he might try to follow the lead of Wall Street financiers in seeking a resolution, although he fears his Detroit address will work against him.

"I might apply for a bailout," Howarth said. "But, for us, there seems to be some sort of stigma."

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